Duty exemption of Tk 340b in FY 2022-23

The recently ousted Awami League government offered the highest amount of duty exemption in the financial year ahead of the 12th national polls. The government did this to please the businesspersons. This information came up in a report prepared by the National Board of Revenue (NBR).

The report says the amount of duty exemption reached Tk 340 billion in total in the 2022-23 fiscal, which is the highest in the history of the country, relevant officials say.

The national election was held in the first week of January this year. NBR’s custom officials feel the government exempted tax and duties to gain the support of the business community.

The International Monetary Fund (IMF) has a condition to curb duty and tax exemptions against the USD 4.7 billion-loan it approved for Bangladesh. The agency believes the amount of the duty and tax exemptions must be rational, which would increase the revenue collection from local sources.

The NBR made an account of the total sum of duty and tax that the government exempted in the last three years to meet the condition imposed by the IMF. The Bangladesh Customs has finalised a report based on that account. It shows a total of Tk 337.29 billion was exempted as duties and taxes in the 2022-23 fiscal, which was Tk 55 billion less in the previous fiscal. The amount was Tk 282.4 billion in 2021-22 fiscal, Tk 60 billion more than that of in the previous fiscal.

Speaking regarding this to Prothom Alo, Selim Raihan, executive director of the South Asian Network on Economic Modelling, “The influential businesspersons take the benefit of duty exemption ahead of the polls. We have seen the amount of revenue the government lost due to this decision. Now we have to see how much those beneficiaries contributed for the betterment of our economy. As far as I know, they don’t have any notable contribution to our economy. The entire issue should be reviewed.”

The amount of duty exemption was the highest in the power sector. In the 2022-23 fiscal, the government exempted duties worth Tk 69.14 billion in this sector. The government mainly exempted such a large amount of duties for the government and private companies importing equipment for power plant construction. Most of the top businesspersons of the country have investments in the power sector.

The capital equipment sector is second in the list in terms of getting duty exemption. The amount of duty exempted was Tk 59.68 billion in this sector in the 2022-23 fiscal. The amount was Tk 56.54 billion in the specialised production sector. This sector is followed by the readymade garment sector and the leather sector in the list.

The amount of duty exemption on the import of all sorts of equipment for the defence sector was Tk 45.90 billion. Besides, the government exempted import duties worth almost Tk 45 billion on the import of raw materials for industries.

According to the NBR sources, there are a total of 7,541 products in the tariff line. The tax burden against the import of these products varies from 0-1021 per cent. The import duty against these products varies from 0-25 per cent.

Apart from that, the importers have to pay several other taxes and duties, including supplementary duty, value added tax (VAT), regulatory duties and advance taxes. An influential businessperson lobbies for getting duty exemption for cost cutting and to reduce the import cost.

NBR sources say the government imposes a 0-15 per cent import duties on 6,650 products, which covers 88 per cent of the products in the tariff line. The government imposes supplementary duties on 26 per cent of the tariff line products. The rate of supplementary duty is 20 per cent in most of these products. Besides, a 3-35 per cent regulatory duty is imposed on 3,565 products, which is 47 per cent of the products in the tariff line.

* This report appeared on the print and online versions of Prothom Alo and has been rewritten in English by Ashish Basu